The red submarines

Katy says: Chilean newspaper El Mercurio reprinted a story today originally broken by Argentine daily Clarín: Chávez is in the market to buy nine new submarines for the Venezuelan Navy, with expected costs in the billions of dollars. The main reason, according to Chávez aide Alberto Müller, is that Venezuela is concerned about a possible U.S. invasion.

This would make Venezuela the proud owner of the largest submarine fleet in the continent, with more subs (11) than Brazil (5), Colombia (4), Chile (4), Argentina (3) or Ecuador (2). Look for this to raise eyebrows in the hemisphere’s diplomatic circles. In the meantime, we can only hope people in Venezuela begin to wake up and wonder why a President spends billions of dollars on sophisticated weaponry that will fail to defend us in a war he seems bent on leading us to, while millions are in desperate need for a job, a home or an education.

Other recent newsworthy developments deserve some attention:

EU breaks myth of opposition media: The EU delivered its report on the December Presidential Elections. While pointing out that the process on election day worked within international norms, it highlighted the gross imbalance in media coverage, blasting the CNE for not doing enough to prevent the use of government funds to advertise the Chavez campaign and criticizing excessive media bias in favor of the President. Shamefully, the CNE has a rosy press release on the Report but does not have a link to the document itself – get it here directly from Súmate’s web page.

I was glad to see the EU debunking something Chávez apologists kept parroting the days before the election: that using government funds to advertise Chavez was OK because Rosales was doing it too. The EU determined that while institutional messages were biased either toward Chavez or Rosales, the ratio in favor of Chavez was 19 to 1, finding that 95% of all institutional advertising was deemed favorable to Chavez (p. 32).

The EU also said that state-owned channel VTV gave Chávez 86% of its time slotted to political information, with almost 80% of that information shedding a positive light on the President. Meanwhile, VTV gave opposition candidate Manuel Rosales a 14% coverage, and 70% of that coverage was negative, all at taxpayer expense (p. 33). Globovisión was found to be equally biased, something we have criticized on this blog before, although the proportion of Rosales-to-Chávez coverage was smaller than the Chávez-Rosales ratio in VTV and not as negative toward Chavez as VTV was toward Rosales.

Finally, the EU also noted that Televén and Venevisión – two private channels that are not yet on the government’s list of things to take over – were unbiased but heavily slanted toward the government (p. 34). So much for the urban legend of Venezuela’s media being anti-Chávez. As for the written media, the EU curiously finds that the most biased newspaper in Venezuela is Diario Vea, which relies heavily on government subsidies and advertising and is headed by well-known chavista figureheads (p. 36).

The document is a good read, for those who have the time.

Mickey Mouse money: The Central Bank reported Bs.26.9 trillion in earnings last year, about US$12 billion at the official exchange rate. One wonders where these earnings are coming from since the exchange rate has been fixed for more than a year, but leave it to creative chavistas accountants to come up with the numbers. When the Central Bank meets Chávez’s demands for $8.7 billion of its assets to be transferred to him, it will have transferred a whopping $19 billion to Chávez since the beginning of 2006.

It is clear the Central Bank is financing the government with the currency reserves that back the bolívars in Venezuelan’s pockets. If the price of oil were to fall moderately, the bolívar (or whatever it is called by then) will lose value quickly. Inflation will shoot up and a recession will be upon us. We’ve seen this movie played a million times, and it will happen again.

Bean counters on crack: As if to highlight the insanity of public finances, Venezuela’s tax-collector warned that tax receipts will be Bs.12.8 trillion (US$6 billion) lower this year than last, thanks to the President’s rash and messy VAT tax cut. While this is playing out, we get the news that state oil giant PDVSA will borrow $8 billion this year.

One has to wonder why an oil company has to go around borrowing such an insane amount of money when oil prices are still pretty high and while the government is cutting taxes, but that’s Chavenomics for you. PDVSA President Ramírez is also on the record urging, almost begging, OPEC to lower current production quotas by at least 500.000 barrels per day, revealing a not-so-subtle fear that a further drop in oil prices could really hurt the Revolution.

That’s mine too: In a rare press conference, Chávez announced that he is ready to pass a law controlling the prices of housing and private schools. Since the President recently passed a controversial law saying that the government can take over, at any point in time and without a court order, any industry that is submitted to price controls, this is an ominous sign since it would give the government the legal authority to take over private schools or private housing at will.

Anyone investing in housing and not paying off the government has to be insane – as is anyone thinking there is no chance private schools will be taken over. None of this is surprising – after all, Cubans don’t go to private schools, nor do they own the homes they live in.

The tenientico’s psychotic rants: In the same press conference, the President also blasted a reporter from Brazil’s O Globo (see Daniel’s excellent blow-by-blow account here) and hinted that private property should be “supressed” and “eliminated” if it goes against society. Chávez did not clarify.

Finally, Chávez said that people raising cattle or selling processed beef should forget about making money because, as he sees it, the most important thing is for the people to eat beef. Recent draconian price control measures have basically wiped out legitimate profits in the meat-producing business, so expect to see a collapse in the country’s beef production in the coming months.